Small retailers brace for 'huge hit' this holiday season as shipping costs spike

Summary

• Jenni Shields' average shipping cost per package rose from $2.93 eight years ago to nearly $6 last month.
• Rising fuel prices have increased shipping costs across sea, air, rail, and road transport.
• Amazon reported an 11% increase in shipping expenses in the third quarter compared to the previous year.
• Global air cargo rates reached $3.37 per kilogram, a 43% increase from a year ago.
• Demand for hardware used to build data centers is contributing to higher air freight rates.
• Small businesses face squeezed margins while larger companies often have dedicated shipping deals.
• Todd Shelton began charging customers for return shipping after absorbing higher material and shipping costs.
• Shields is considering raising shipping fees for the first time in six years.
• UPS, FedEx, and USPS have instituted holiday surcharges that vary by package type.
• Retail sales through the end of the year are expected to grow 4.2% to $1.01 trillion.
• Part of the sales growth is attributed to inflation rather than increased quantity of goods purchased.
• Non-discretionary categories are expected to perform well while discretionary spending may decrease.
• Record shipping costs are putting immense pressure on smaller retailers who may face financial distress in the first quarter of next year.
• Larger retail companies may not feel the full impact of rising costs until later quarters due to locked-in contracts and control over delivery fleets.